Fractional Ownership: A New Way of Investing In Real Estate
For many people, real estate investment seems all but a dream.
This comes at no surprise. Even purchasing a property to become a homeowner is a feat in and of itself. In the US, home ownership is less common in adults 35 and under, with only 38.5% of young Americans making up the 70% of homeowners in the United States.
For young people, home ownership and real estate investment is of high interest. 75% of Generation Z saves towards a down payment for a home. However, 22% of the young generation believe that they will never have enough money to put towards home ownership or initial real estate investment. With the rising costs of materials, homes are becoming more expensive. Surveys have shown that when asked about what the average home price is in the US, young people often underestimate the average property cost by $100,000 USD.
For many adults but in particular for young adults, many barriers exist to homeownership and real-estate investment: lack of experience, lack of time, lack of funds, avoidance of risk, and lack of market knowledge. Real estate investment can be very scary, especially if you do not know the ins and outs of the intricacies of real estate investment, have $20K available to put towards a down payment, and or have crippling debt such as student loans. In addition to the cost of the properties themselves, add in the cost of taxes and any fees associated with using middlemen and brokerage firms. With the high bar of capital needed to enter the real estate investment market even for a first-time homebuyer, this puts many properties out of range for people to acquire, thus discouraging full ownership. These fears surrounding real estate investment are also furthered by people not having the right education in regards to real estate investment and the availability of many conflicting opinions
Fear not. There is a way to enter the real estate investment market, even if you are not a homeowner. This new way is known as fractional ownership.
What exactly is fractional ownership? Fractional ownership is the ownership of a share of the real estate. People often get fractional ownership confused with timeshares. In fractional ownership, the property is actually partially owned by the investors rather than the time. Some fractional ownership properties where people may spend time are actually quite luxurious and can be found in many appealing destinations for travelers. With fractional ownership, shareholders split the costs of upkeep and maintenance of a property, thus making these properties more obtainable for eager investors.
Coinciding with this new form of real estate investment is Web 3.0. Web 3.0 is a form of internet service that uses blockchain technology and adheres to the principles of decentralization — putting the ownership of content in the hands of individuals rather than large technological companies. In Web 3.0, content such as images, audio files, videos, written content, and more are encrypted and able to be accessed via tokens. Different blockchains have different tokens, but some common tokens you may have heard of include Ethereum, Ether, and NFTs.
How does Web 3.0 connect to the real estate investment market? A new economy is emerging known as the play-to-earn gaming economy. In this economy, individuals play games on online platforms and are able to earn tokens which can allow users to purchase items within the digital platform or exchange them for other tokens within the blockchain that can be exchanged for mainstream currency such as the US dollar or Euro. With the emergence of Web 3.0 and blockchain technology, companies are seeking ways to connect Web 3.0 technology to real world assets.
One company, PlayEstates, has done something highly disruptive by connecting fractional real estate ownership to a digital token. To enter this platform, all that is needed is $5.00 USD to get started. Once you become a member, you are able to start playing games and earning tokens. Once a member acquires enough tokens, they may purchase a special NFT that corresponds to a fractional ownership of an actual real estate property. With PlayEstates, the company takes care of all of the stress that fractional owners often have to deal with — taxes, property upkeep, and the paperwork. All that members have to do is play games, earn tokens, and have fun while investing in real estate.
With a low starting cost and no hassle, individuals can get started in the real estate investment market and begin generating a form of passive income. No brokerage firms or middlemen involved. Get started in the real estate investment market by creating your PlayEstates account today.